Chinese Leaders Vow to Step Up Support for Flagging Economy
Pledges on government spending and monetary support come as data points to slowing growth
4 min
Chinese leaders vowed to increase government spending and monetary support for the economy at an annual gathering, signalling they plan to stick with a measured approach to stimulus despite calls for bolder action.
The Central Economic Work Conference, which ended Tuesday, capped a bruising year for the country’s economy, which has struggled with a drawn-out housing crunch and weak consumption.
The trouble shows no sign of abating. After a pickup in the third quarter, data in recent weeks has pointed to slowing growth again as exports struggle, activity in the services sector slows and deflation deepens.
Still, Chinese leaders offered few specifics Tuesday on how they intend to reignite consumer and business confidence and reinvigorate growth.
Chinese leader Xi Jinping presided over the two-day meeting, where leaders urged officials to increase fiscal stimulus and help expand domestic demand, according to Chinese state media. They also acknowledged economic challenges, including “excess capacity in certain industries and weak sentiment in the society,” according to a readout of the meeting.
Chinese leaders also called for strengthening the resilience of industrial supply chains and accelerating the development of artificial intelligence, as well as other strategic industries such as aerospace and biotechnology.
The closed-door meeting, which is typically held in December each year to map out plans for economic policy-making, sets out the leadership’s growth ambitions for the following year, though the detailed targets won’t be released until March, during the National People’s Congress.
Though the overall tone of the conference was pro-growth, “it is still not a call for massive stimulus,” economists at Société Générale said in a note to clients after the readout was published. Instead, officials are emphasising the need to stabilise the economy and stem risks to growth, they said.
Many economists expect Beijing to anchor its growth target at around 5% in 2024, taking their cue from a meeting last week of the Communist Party’s Politburo, its body of top leaders. Policy makers emphasised the importance of economic progress, saying the country needed to “pursue stability through growth.”
This year’s target was also set at around 5%. Despite its difficulties, the economy looks set to hit that goal this year, but economists say maintaining that pace will be tough without bigger measures to stimulate the economy.
Beijing has taken some measures this year including interest rate cuts and channeling cheaper loans to firms to arrest the downturn but has so far failed to reverse a broad-based loss of confidence.
China’s difficult year contrasts with surprising resilience in the U.S., where buoyant consumer and government spending have kept the economy motoring despite aggressive increases in interest rates by the Federal Reserve. The latest data on jobs and inflation has stoked optimism that the U.S. will avoid recession and instead enjoy a “soft landing,” in which price growth slows to target without a steep rise in unemployment. That marks a reversal in expectations from earlier in the year when China was expected to easily outpace a cooling U.S. economy.
And there are fresh signs of trouble for China.
Business surveys showed factory activity slid deeper into contraction in November as domestic and foreign orders dried up, while activity in the services sector shrank for the first time this year as consumers cut back spending.
Exports rose just 0.5% on the year last month after shrinking for six months, highlighting the drag from slowing growth in the U.S. and Europe.
Weak domestic spending and bloated industrial capacity caused consumer prices in China to fall in November for the second straight month, deepening a bout of deflation that economists say could prove hard to shake if the economy doesn’t pick up soon.
China’s slow-motion property crunch shows few signs of abating. Some developers have defaulted on their debts and construction has stalled on millions of homes. Home prices fell in October and new investment in the sector is shrinking.
A central question for investors and economists is whether Beijing will experiment with novel stimulus approaches to shore up battered confidence among households and businesses.
At the meeting, Chinese leaders vowed to expand consumption and raise income for both urban and rural residents but offered little sign that they may pivot to giving cash handouts to households, despite repeated calls from policy advisers and economists to do so.
Instead, the government is seen as more likely to step up efforts to resolve the crisis in the property market, which remains a major drag on overall growth.
Chinese leaders called for equal treatment for developers to meet their financing needs—a likely reference to the perception that banks favour state-backed developers over private ones. They also urged accelerating the construction of government-subsidised affordable housing and urban village renovation projects.
Still, the meeting didn’t spell out a plan to help cash-strapped developers finish tens of millions of uncompleted apartments, a crucial step that economists believe will help restore household’s confidence in the government.
While officials aren’t expected to disclose a growth target until a political gathering next spring, economists and investors are already debating how aggressive Beijing will be with its 2024 goal.
Economists from J.P. Morgan predicted that policy makers will likely maintain a goal of around 5%, to signal a renewed focus on the economy. Robin Xing, chief China economist at Morgan Stanley, said he expects Beijing to set a target of 4.5% to 5% and pursue a stronger fiscal stimulus.
Others believe Beijing will stick to a more conservative target because of the headwinds facing the economy. Ting Lu, chief China economist at Nomura, said he expects China to aim for around 4.5%.
“I still think the Chinese government is quite rational,” said Lu, who cautioned that the economy hasn’t bottomed out and the actual growth rate could slip to 4% in 2024 from Nomura’s 5.2% forecast for 2023.
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Geoffrey Hinton hopes the prize will add credibility to his claims about the dangers of AI technology he pioneered
4 min
The newly minted Nobel laureate Geoffrey Hinton has a message about the artificial-intelligence systems he helped create: get more serious about safety or they could endanger humanity.
“I think we’re at a kind of bifurcation point in history where, in the next few years, we need to figure out if there’s a way to deal with that threat,” Hinton said in an interview Tuesday with a Nobel Prize official that mixed pride in his life’s work with warnings about the growing danger it poses.
The 76-year-old Hinton resigned from Google last year in part so he could talk more about the possibility that AI systems could escape human control and influence elections or power dangerous robots. Along with other experienced AI researchers, he has called on such companies as OpenAI, Meta Platforms and Alphabet -owned Google to devote more resources to the safety of the advanced systems that they are competing against each other to develop as quickly as possible.
Hinton’s Nobel win has provided a new platform for his doomsday warnings at the same time it celebrates his critical role in advancing the technologies fueling them. Hinton has argued that advanced AI systems are capable of understanding their outputs, a controversial view in research circles.
“Hopefully, it will make me more credible when I say these things really do understand what they’re saying,” he said of the prize.
Hinton’s views have pitted him against factions of the AI community that believe dwelling on doomsday scenarios needlessly slows technological progress or distracts from more immediate harms, such as discrimination against minority groups .
“I think that he’s a smart guy, but I think a lot of people have way overhyped the risk of these things, and that’s really convinced a lot of the general public that this is what we should be focusing on, not the more immediate harms of AI,” said Melanie Mitchell, a professor at the Santa Fe Institute, during a panel last year.
Hinton visited Google’s Silicon Valley headquarters Tuesday for an informal celebration, and some of the company’s top AI executives congratulated him on social media.
On Wednesday, other prominent Googlers specialising in AI were also awarded a Nobel Prize. Demis Hassabis, chief executive of Google DeepMind, and John M. Jumper, director at the AI lab, were part of a group of three scientists who won the chemistry prize for their work on predicting the shape of proteins.
Thinking like people
Hinton is sharing the Nobel Prize in physics with John Hopfield of Princeton University for their work since the 1980s on neural networks that process information in ways inspired by the human brain. That work is the basis for many of the AI technologies in use today, from ChatGPT’s humanlike conversations to Google Photos’ ability to recognise who is in every picture you take.
“Their contributions to connect fundamental concepts in physics with concepts in biology, not just AI—these concepts are still with us today,” said Yoshua Bengio , an AI researcher at the University of Montreal.
In 2012, Hinton worked with two of his University of Toronto graduate students, Alex Krizhevsky and Ilya Sutskever, on a neural network called AlexNet programmed to recognise images in photos. Until that point, computer algorithms had often been unable to tell that a picture of a dog was really a dog and not a cat or a car.
AlexNet’s blowout victory at a 2012 contest for image-recognition technology was a pivotal moment in the development of the modern AI boom, as it proved the power of neural nets over other approaches.
That same year, Hinton started a company with Krizhevsky and Sutskever that turned out to be short-lived. Google acquired it in 2013 in an auction against competitors including Baidu and Microsoft, paying $44 million essentially to hire the three men, according to the book “Genius Makers.” Hinton began splitting time between the University of Toronto and Google, where he continued research on neural networks.
Hinton is widely revered as a mentor for the current generation of top AI researchers including Sutskever, who co-founded OpenAI before leaving this spring to start a company called Safe Superintelligence.
Hinton received the 2018 Turing Award, a computer-science prize, for his work on neural networks alongside Bengio and a fellow AI researcher, Yann LeCun . The three are often referred to as the modern “godfathers of AI.”
Warnings of disaster
By 2023, Hinton had become alarmed about the consequences of building more powerful artificial intelligence. He began talking about the possibility that AI systems could escape the control of their creators and cause catastrophic harm to humanity. In doing so, he aligned himself with a vocal movement of people concerned about the existential risks of the technology.
“We’re in a situation that most people can’t even conceive of, which is that these digital intelligences are going to be a lot smarter than us, and if they want to get stuff done, they’re going to want to take control,” Hinton said in an interview last year.
Hinton announced he was leaving Google in spring 2023, saying he wanted to be able to freely discuss the dangers of AI without worrying about consequences for the company. Google had acted “very responsibly,” he said in an X post.
In the subsequent months, Hinton has spent much of his time speaking to policymakers and tech executives, including Elon Musk , about AI risks.
Hinton cosigned a paper last year saying companies doing AI work should allocate at least one-third of their research and development resources to ensuring the safety and ethical use of their systems.
“One thing governments can do is force the big companies to spend a lot more of their resources on safety research, so that for example companies like OpenAI can’t just put safety research on the back burner,” Hinton said in the Nobel interview.
An OpenAI spokeswoman said the company is proud of its safety work.
With Bengio and other researchers, Hinton supported an artificial-intelligence safety bill passed by the California Legislature this summer that would have required developers of large AI systems to take a number of steps to ensure they can’t cause catastrophic damage. Gov. Gavin Newsom recently vetoed the bill , which was opposed by most big tech companies including Google.
Hinton’s increased activism has put him in opposition to other respected researchers who believe his warnings are fantastical because AI is far from having the capability to cause serious harm.
“Their complete lack of understanding of the physical world and lack of planning abilities put them way below cat-level intelligence, never mind human-level,” LeCun wrote in a response to Hinton on X last year.
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